investment capital
Under the investment capital in the most General sense, refers to a temporary failure of the economic subject of consumption available to it the resources (capital) and use of these resources for the future growth of their own wealth.
The simplest example of investment capital is cash used for the purchase of property, characterized by significantly lower liquidity - equipment, real estate, financial or other outside of the current assets.
The main features of investment activity, defining approaches to its analysis, are:
The irreversibility of the related temporary loss of consumer value of equity (for example, liquidity).
The expectation of increase of the initial level of wealth.
The uncertainty associated with the assumption results in a relatively long-term perspective.
To distinguish the two types of investment capital: the real and financial (portfolio).
It should be noted that in the case of real investments for achieving the planned goals, as a rule, is the use (operation) of the relevant non-current assets for the production of some products and further its implementation. Here, for example, include the use of organizational and technical structures of the newly formed business for profit in the course of authorized activity created with attraction of investments of the enterprise.
In investment capital receipt of profit precedes the reimbursement of initial investment, which corresponds to the notion of "depreciation". In the case of investments in non-current assets this function is performed by the depreciation charge.
Thus, the rationale for the implementation of the main requirements for the project in the sphere of real investments is based on the calculation of depreciation charges and profit within the horizon of the study. This amount, in the most General case, is the total cash flow operating period.
The main objective of the evaluation of the investment project - the rationale for its commercial (entrepreneurial) solvency. The latter implies that the two fundamental requirements:
A full refund (ROI) of the invested funds.
Reception of profit, the amount of which justifies a waiver of any other way to the use of resources (capital) and compensates for the risk arising due to the inherent uncertainty of the outcome.
